Kohl's To Expand Apparel Brands Into Home
August 22, 2005,
Kohl's is looking to buttress its home business by rolling out new brands this fall and next spring — part of a broader strategy to appeal to consumers beyond its core family demographic.
The goal, according to President Kevin Mansell, is to shift the perception of Kohl's home department as a place for items to a destination for the total home. Key growth areas include bedding, rugs, utility bedding, food preparation aids, cookware and tabletop, he said.
“Much like the domination we think we have in home décor, there isn't any reason in our estimation why we can't have the same position in these categories,” he said.
In bedding, Kohl's has always done a strong business in solid color, he said. Now the company sees an opportunity to focus on fashion and more clearly differentiate its assortments.
“Rugs, very similar story, an opportunity from a fashion perspective,” Mansell said.
Kohl's is attracted to the higher margins in utility bedding as well as the fact that it's a replenishment business — “which is something which should be a core strength.” A new, modified prototype store in the Boston area — which will begin rolling out to as many stores as possible in fall 2006 — presents soft home in a more shoppable format that displays categories, price points and style variations more distinctly, he said.
The new prototype features updated décor with emphasized focal walls; enhanced merchandise presentation; upgraded fitting rooms, restrooms and customer service; raised ceilings; improved lighting; and an updated exterior with increased view into the store.
Kohl's strategy going forward is to fatten comps by pulling in more single women and empty nesters with added discretionary income, said Arlene Meier, chief operating officer. The retailer's “sweet spot” with a 6.1 percent share of the market has always been — and will continue to be — what it dubs The Classic American Family: women aged 35 to 44 with children. Kohl's also will continue to support the second pillar of its customer base: young moms aged 25 to 34, which represents a 3.9 percent share.
“The soccer mom — which is how we've always defined this customer — will remain our bull's eye consumer. But we've recognized there's substantial opportunity around her, while at the same time not alienating her,” Meier said.
Kohl's is targeting two new segments for growth. The “independent taste segment” consists of women aged 45 to 54, primarily empty nesters with a 4.5 percent market share. The “self-focused explorer” group is made up of single women aged 25 to 34 who tend to look more for fashion and contemporary looks, representing a 3.1 percent share.
“These two groups can spend more on themselves and their homes,” Meier said.
The Nine & Co., Apt. 9 and Candie's home extensions will target both groups, Mansell said. Meanwhile, existing home brands such as Royal Velvet in bath, Laura Ashley Lifestyles and Docker's will address the “classic American” customer.
Merchandising selections are now being assorted according to a nine-box lifestyle grid that cross-references products that appeal to classic, updated and contemporary customers on a good/better/best basis, Mansell said. There will be an overall emphasis on lifestyle brands to expand the company's reach and capture additional market share. He continued that the classic customer prefers casual, easy-to-understand design. The updated customer is attracted to the Pottery Barn sensibility. The contemporary customer responds to the sort of trend-right merchandise exemplified in home by Crate & Barrel, he said.
Kohl's By The Numbers
By the end of fiscal year 2010, 670-unit Kohl's plans to operate more than 1,200 stores with sales of $24 billion and net income of approximately $1.9 billion. The company's expansion plans for 2006 to 2007 include opening 200 stores and its first entry into the Pacific Northwest in Portland, Ore., and Seattle this spring. The company now operates three formats:
|Type||Sq. Ft. (x000)||Trading area||1st-year volume ($mil)|
|1. First tested in 2002, with another six units opening this fall. More to come in the future.
2. Opened first two units last fall in Queens and Fresh Meadows, N.Y. Just opened another in Chicago's Lincoln Park neighborhood. More to come in the future.
Source: Kohl's Investor Conference, Aug. 17, 2005
|Small store¹||68||Relatively rural||10-12|
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